Ireland’s reputation as an easy place to do business is under threat from increasingly onerous tax filing requirements for SMEs, the President of the Irish Tax Institute (ITI) has warned.
Colm Browne, a tax director with PWC, told guests including Finance Minister Michael McGrath at the ITI’s annual black-tie dinner in Dublin last night that small and medium-sized businesses were buried under the same mountains of paperwork as well-resourced global multinationals.
“The corporation tax return now runs to 56 pages – it was eight pages in 2001. And the same form applies whether you are a small domestic business or a large multinational,” he said.
He said the administrative burden associated with tax compliance was compromising Ireland’s business competitiveness and needed to be lightened after ballooning in recent years, adding that this could be achieved while maintaining a robust administrative system.
Mr Browne’s warning about increasingly complex tax returns comes after similar calls by small businesses and the accountants who serve them.
The Covid-19 pandemic put SMEs and small accountancy firms under unprecedented pressure to meet filing deadlines as businesses made use of State supports such as tax debt warehousing, wage subsidies and energy rebate schemes.
Firms can lose access to any of these vital supports if their tax affairs are not up to date, often meaning the most vulnerable and those in need of support are at the greatest risk from extra paperwork.
In his first public remarks after become president of the ITI, Mr Browne called for a “pragmatic” approach by Revenue to impending payment plan deadlines for tens of thousands of businesses enrolled in the tax warehousing scheme.
Others such as Chartered Accountants Ireland and the Midlands ACCA Network called for numerous deadline extensions from Revenue on Employer Wage Subsidy Scheme (EWSS) compliance deadlines as well as Companies Registration Office deadlines.
Mr Browne also called on the Government to announce a move to a territorial system of taxation by the end of the year to give certainty to companies.
He said the current regime, in which Irish-based companies pay tax on income sourced in other countries, is too complex and causes uncertainty for businesses.
“Ireland is now an outlier among OECD countries in persisting with a worldwide regime and we know from member firms that it is being used against us by our competitors in the fight for investment,” he said.
“An early confirmation from the Government of its intention to move to a territorial regime, with a participation exemption for foreign dividends and branch profits, would greatly strengthen Ireland’s position at the negotiating table and help us to protect existing and future foreign direct investment.”
